Mar 28, 2025 (MarketLine via COMTEX) --
Crude oil prices increased overall during the week after the US introduced new sanctions on crude oil purchases from Venezuela. Prices were also buoyed by a monthly growth in business activity in China aEUR" the worldaEUR(TM)s second-largest crude oil consumer. Moreover, prices were also buoyed by a weekly fall in the US crude stockpiles. Nevertheless, a partial peace deal in the Ukraine conflict encompassing energy infrastructure and Black Sea trade somewhat contained the gains in oil prices during the week.
Some key factors that led to changes in crude oil prices this week are as follows:
- Oil prices rose on Monday and then remained largely firm on Tuesday, after the US left the door open for tariff discussions with China and other countries. It raised hopes that some essential imports in the US might be spared from tariff hikes. Prices were also buoyed by expectations of lower crude oil supply from Venezuela after the US President Trump announced 25% tariffs on all countries that would import hydrocarbons from the South American nation. Venezuela’s crude oil output was already on a downward trend after the US revoked Chevron’s license to operate in that country. However, Ukraine and Russia agreed to halt attacks on energy assets and guaranteed safe passage to all vessels in the Black Sea, thereby eroding some of the gains in oil prices. This deal raised the possibility of a complete ceasefire in the coming weeks. Besides, the upside to prices was somewhat restrained by high interest rates in the US and its impact on commercial and consumer activities. After the US Federal Reserve left the benchmark interest rates untouched last week, one of its key decision makers hinted that at most one additional rate cut of 25 basis points might be implemented this year. It led to a rise in the US dollar against other currencies, thereby making crude oil purchases costly for customers from those markets.
- Oil prices extended gains on Wednesday, supported by the anticipation of constrained crude oil supplies from Iran and Venezuela in light of the latest US sanctions. Additionally, a weekly decline in the US crude inventory contributed to the upward price movement. According to the US Energy Information Administration (EIA), the nation's crude inventory decreased by 3.3 million barrels for the week ending March 21, 2025. Nonetheless, the upward movement of oil prices was somewhat tempered by indications that OPEC+ intends to adhere to its strategy of incrementally increasing output in May 2025. The consortium has previously declared a production escalation for April, and the prospect of enhanced crude availability in May could potentially signal an early surplus in the market.
- Oil prices rose slightly on Thursday, supported by prospects over lesser crude availability in the global markets due to Western sanctions on key exporters – Russia, Iran, and Venezuela. The latter two countries saw further tightening of restrictions from the US over the past week, prompting crude purchasers to reconsider alternate suppliers. Major Indian refiner, Reliance Industries, a frequent buyer of Venezuelan crude oil, announced that it will discontinue its purchases after the US imposed 25% tariffs on buyers from this country. Prices also received some support from a slight dip in the unemployment claims in the US, indicating a relatively stable job environment in the country.
- Oil prices dipped on Friday, weighed down by concerns over a likely slowdown in the US economy from the wide range of tariffs adopted over the past two months. The US administration announced that its 25% import tariffs on cars and light trucks would come into effect from April 2, 2025. The country also intends to levy similar tariffs on auto parts from May 3, 2025. However, the downside to prices was somewhat contained by expectations of a rise in the OPEC+ crude oil output in April 2025 in line with its production policy.
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COMTEX_464201440/2227/2025-04-03T15:01:27
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